Dear Telstra: pack up your toys, go home

Rejecting Telstra's proposal, after all, is the only conclusion Conroy can reach: as someone whose entire philosophy is built around transparency and process, he simply cannot keep Telstra as part of the NBN bidding process anymore.

If you've ever played a board game with a young child,
you've probably dealt with the internal struggles one faces in
trying to establish a fair contest. Do you just let them win to
boost their confidence; do you whip them outright to build their
constitution; or, perhaps, do you agree to their requests for
one-sided rule changes that favour their particular
capabilities?

As Telstra's embarrassing half-response to the Federal government's NBN tender rockets through the media
today, I couldn't help but think that the company's board has
been spending a bit too much time playing Monopoly — the board game
— with their grandchildren.

And not only have they been offering small perks like the
pick-up-the-fines-when-you-land-on-Free-Parking or
get-$500-when-you-land-on-Go rules, but they're likely relaxing
hotel zoning laws and actively dipping into the bank to slip money
into the lucky grandkids' hands. Is that a casino I see over on
Ventnor Avenue?

Telstra has submitted not an NBN bid, but a proposal that basically flips Conroy the bird and promises Telstra will still come to the table

This sort of thing just doesn't fly in the real world — but the
people behind Telstra's bid just don't seem to have gotten that
particular memo.

After months spent unsuccessfully trying to wrangle special
concessions from Senator Stephen Conroy, Telstra has submitted not
an NBN bid, but a proposal that basically flips Conroy the bird and
promises Telstra will still come to the table — later, and on its
terms — if the government wants it to.

Incredibly, the terms of Telstra's proposal don't even vaguely
resemble the requirements of the NBN RFP. Now, I know this issue will be dissected a hundred ways to Sunday before the week is over, but here are a few major points to
contemplate:

Telstra is proposing to invest up to $5 billion in the new
network. This gives a total network value of just $9.7 billion —
about half the $20 billion at which Telstra executives priced the
network at the company's annual general meeting last Friday.

This
means either Telstra has decided to do its sums using the same
number system as Terria and other analysts — who have repeatedly
slammed Telstra's inflationary estimates — or that Telstra's
proposal is more limited in scope than what it was previously
suggesting.

Amazingly, the latter seems to be true. Telstra's proposal
says that "up to 90 per cent of the population would be covered".

Even those with a casual interest in the bid know Conroy has
explicitly required "high-speed, fibre-based broadband network,
providing downlink speeds of at least 12 megabits per second to 98
per cent of Australian homes and businesses". It's right there on
the NBN main page.

Which version have Telstra's executives been reading?

Telstra's underdone, useless proposal is ... an offer that, when Conroy gets tired of what Telstra feels are unequal rivals, he is welcome to crawl back to kiss McGauchie's proverbial

Telstra's proposal will deliver 25Mbps to 50Mbps to "65
percent to 75 percent of the footprint" and "between 12Mbps and
20 Mbps" to everyone else. The remaining 10 per cent of Australians
get ... just what they have now.

Telstra's proposal talks about "a $29.95 per month entry
level 1Mbps retail broadband pricing plan" over its new network.
Again, what proposal is Telstra reading? I thought it was pretty
clear to everyone that 1Mbps services were to go the way of the
dodo.

The NBN is about progress, not about spending billions of
taxpayers money to get a service slower than what I can already get
today from the likes of TPG,
iiNet, and
others.

Telstra wants the government's $4.7 billion provided as a
concessional loan, not a straightforward contribution. Despite the
clear desire of the government to have an equity stake in the NBN
through its contribution — and, potentially, to get a return for
taxpayers as the network takes off — Telstra wants it structured as
a loan, of all things.

This, of course, is so Telstra can pay back
the loan and eventually own 100% of Australia's next-generation
broadband network. Does this sound like what you voted for?

Telstra's proposal is nonbinding — just a promise of what it
might deliver if the government makes the concessions it has so far
refused to. I don't recall this possibility ever being described
in the tender documents. Telstra was supposed to submit its NBN
bid, and it did not.

Telstra called a press meeting to announce its lodgement with 45
minutes' notice, and unfortunately I couldn't make it. But I was
at Telstra's AGM last Friday, and I was somewhat amazed (albeit
not too surprised) to see chairman Donald McGauchie continuing to
rail against the government and call for regulatory guarantees that
Conroy had explicitly ruled out just the day before.

Conroy may have his own shortcomings, but his refusal to cave in
to Telstra's demands for preferential treatment are to be
commended. By pushing its own party line right up to the deadline,
Telstra has not only shown that its executives are simply not
paying attention — but that they have managed to get themselves
ruled out of the running for the NBN entirely.

Rejecting Telstra's proposal, after all, is the only conclusion
Conroy can reach: as someone whose entire philosophy is built
around transparency and process, he simply cannot keep Telstra as
part of the NBN bidding process anymore.

they have managed to get themselves ruled out of the running for the NBN entirely

Its proposal falls short
of the tender's requirements in so many areas that any other
conclusion would be both a fatal lapse of prudence, and a slap in
the face to the three (or more) other companies that duly submitted
compliant bids in good faith.

I am reminded, suddenly, of the (quite funny, if you haven't
seen it) movie Forgetting Sarah Marshall, in which the
aforementioned Ms Marshall dumps our anti-hero protagonist, only to
try to get back together with him — in a way that is far too risque`
to describe in a PG-rated blog — when she comes to regret
jettisoning him.

He is tempted for a second, but then realises
that, even though it would have been inconceivable to him
throughout most of the movie, he is better off without her.

When shareholders grill the management about its exclusion from
the NBN at next year's AGM, Telstra will blame the government. But
in truth, it has only its stubbornness (and, its bid suggests,
inattention) to blame. Telstra's underdone, useless proposal is
exactly the same as Ms Marshall's: an offer that, when Conroy gets
tired of what Telstra feels are unequal rivals, he is welcome to
crawl back to kiss McGauchie's proverbial.

After more than a decade of Telstra's utter contempt for
Australia's broadband policies and technological future, and a
proposal that reflects more of the same, one can only hope that
Conroy is equally strong-willed.